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Commissioner of Income-tax, Kolkata II v/s Everest Agro Industries Ltd.


Company & Directors' Information:- EVEREST INDUSTRIES LIMITED [Active] CIN = L74999MH1934PLC002093

Company & Directors' Information:- R K B AGRO INDUSTRIES LIMITED [Active] CIN = L17100KA1979PLC003492

Company & Directors' Information:- J R AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15342UP1982PTC005792

Company & Directors' Information:- B M AGRO INDUSTRIES LIMITED [Active] CIN = U74899DL1992PLC049988

Company & Directors' Information:- R S AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15319DL1998PTC097025

Company & Directors' Information:- S N T AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U01122DL1997PTC086925

Company & Directors' Information:- D D AGRO INDUSTRIES LIMITED [Active] CIN = U24219PB1999PLC022487

Company & Directors' Information:- S S D AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15100MH1998PTC113744

Company & Directors' Information:- S. A. B. INDIA AGRO INDUSTRIES LIMITED [Active] CIN = U01403UP2009PLC038365

Company & Directors' Information:- U K AGRO INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U15114UP2003PTC028107

Company & Directors' Information:- EVEREST AGRO-INDUSTRIES CORPORATION PVT LTD [Active] CIN = U15491WB1987PTC043528

Company & Directors' Information:- R. K. AGRO INDUSTRIES PRIVATE LIMITED [Under Process of Striking Off] CIN = U15410WB2012PTC180269

Company & Directors' Information:- R J AGRO INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U15311KA2005PTC035485

Company & Directors' Information:- S O I AGRO INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U15310GJ2010PTC059966

Company & Directors' Information:- S I P AGRO INDUSTRIES LIMITED [Strike Off] CIN = U01403WB2012PLC188362

Company & Directors' Information:- S. S. AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15490PN2013PTC146574

Company & Directors' Information:- J J AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15130MH1980PTC023302

Company & Directors' Information:- A R AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U74899DL1992PTC050526

Company & Directors' Information:- G S AGRO INDUSTRIES PVT LTD [Active] CIN = U01132WB1990PTC049960

Company & Directors' Information:- D V AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U74899DL1993PTC051892

Company & Directors' Information:- EVEREST AGRO-INDUSTRIES PVT LTD [Active] CIN = U74140WB1980PTC033016

Company & Directors' Information:- P AND G AGRO INDUSTRIES P LTD [Strike Off] CIN = U99999UP1985PTC007509

Company & Directors' Information:- R. K. G. S. AGRO INDUSTRIES PRIVATE LIMITED [Active] CIN = U15100UP2017PTC097391

Company & Directors' Information:- V G AGRO INDUSTRIES LIMITED [Strike Off] CIN = U01400DL1993PLC051666

Company & Directors' Information:- EVEREST INDIA PRIVATE LIMITED [Strike Off] CIN = U51909DL2010FTC203101

Company & Directors' Information:- T S AGRO INDUSTRIES PVT LTD [Strike Off] CIN = U15209UP1987PTC008974

Company & Directors' Information:- B AND P AGRO INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U01110MH1972PTC015574

Company & Directors' Information:- P V R K AGRO INDUSTRIES PVT LTD [Strike Off] CIN = U01119AP1988PTC008395

Company & Directors' Information:- K R P AGRO INDUSTRIES PVT LTD [Active] CIN = U01110MH1991PTC062304

    IT Appeal No. 35 of 2005

    Decided On, 24 June 2015

    At, High Court of Judicature at Calcutta

    By, THE HONOURABLE MR. JUSTICE SOUMITRA PAL & THE HONOURABLE MR. JUSTICE MIR DARA SHEKO

    For the Appellant: M.P. Agarwal, Advocate. For the Respondent: Mrityounjoy Goswami, Parikhit Goswami, Advocates.



Judgment Text

1.Let a copy of the grounds of appeal filed before the CIT(A), furnished by Mr. Parikhit Goswami, learned advocate for the respondent-assessee, be kept on record. A copy of the same is furnished to Mr. M.P. Agarwal, learned advocate for the respondent-revenue which is served and accepted.

This appeal was admitted on the following substantial question of law;

"Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is correct in deleting penalty of Rs. 2,62,213/- imposed under Section 271(1)(c) of the Income Tax Act, 1961, for suppression of sales of Rs. 5,70,028/-, on the ground that no penalty could be imposed in a case where the net result was loss."

2.We find that the Tribunal, relying on the judgment of the Supreme Court inCITv.Prithipal Singh & Co.[2001] 249 ITR 670/118 Taxman 330, while rejecting the appeal of the revenue, had affirmed the order passed by the CIT (A) in deleting the penalty of Rs. 2,62,213/- under section 271(1)(c) of the Income Tax Act, 1961. Incidentally, the CIT(A), Kolkata following the said judgment held that even if there was concealment, as assessment was made at a loss, no penalty could be imposed.

3.Relying on the judgment of the Hon'ble Supreme Court inJt. CITv.Saheli Leasing & Industries Ltd.[2010] 324 ITR 170/191 Taxman 165, whereinPrithipal Singh & Co.'scase (supra) was considered, it is submitted by Mr. Agarwal that the purpose behind the enactment of Section 271(1)(c) is to penalise the assessee for concealing the particulars of income and/or for furnishing inadequate particulars of income. Since according to the Supreme Court, Explanation 4(a) to Section 271(1)(c) is clarificatory in nature and would apply to all assessments even prior to the assessment year 2003-04 and penalty is still leviable, the question should be answered in the negative and in favour of the revenue and against the assessee.

4.Mr. Goswami, submits since, as evident from the order dated 30th July, 2003 passed by the Assistant Commissioner of Income-Tax, Circle-4, Kolkata, under Section 271(1)(c) of the Act, that notices were not served on the assessee, for the sake of justice, the matter may be remanded before the Assessing Officer for fresh hearing on facts after setting aside the order passed by the Tribunal. Incidentally it appears from the Memorandum of Appeal filed before the CIT(A)-IV, it was pleaded that there had been no suppression. Though the assessee had appeared before the CIT(A)-IV and before the Tribunal, however, in view of by the judgment inPrithipal Singh & Co.'scase (supra), as the case was then covered in favour of the assessee, the point of non-compliance of natural justice was not urged. However, in view of the judgment of theSaheli Leasing & Industries Ltd.(supra), since there is a change in the interpretation of law and as the assessee had taken grounds before the CIT(A) with regard to alleged suppression of sale, the matter may be remanded.

5.Heard Mr.Agarwal and Mr.Goswami, learned Advocates for the parties. It appears that the Assistant Commissioner of Income Tax while imposing penalty at the rate of 100% under Section 271(1)(c) of the Act had held as under;

"This addition has been confirmed by the CIT(A). Consequent to the passing of order by CIT(A) penalty proceedings which were kept in abeyance were again taken up vide issue of notice fixing hearing on 14.5.03. However there was no compliance in spite of the notice being validity served. Thereafter another opportunity was provided to the assessee company fixing hearing on 21.7.03. However the notice server who reported that the assessee company has left could not serve the notice. Subsequently the notice was dispatched by RPAD. However there was no compliance on the said date & time. In the interest of natural justice another hearing was fixed and the hearing notice derived by affixation. However again there was no compliance."

6.Aggrieved, the assessee preferred appeal. The CIT(A)-IV, Kolkata, deleted the penalty imposed. The revenue being aggrieved, preferred appeals before the Tribunal. The Tribunal dismissed the appeal by holding, inter alia, as under:-

"We find that this submission of the Learned DR is not tenable in law as because this amendment to Section 271(1)(c) by addition of Explanation 4 has been brought about by the finance Act, 2002 w.e.f. 1.4.2003. We also find that the Legislature has made the amendment prospectively w.e.f. 1.4.2003 by the Finance Act, 2002. Thus, this Explanation is not clarificatory in nature and, therefore, can be applied to the cases w.e.f. 1.4.2003. This means that this being the assessment year 1995-96, the old provisions apply to the assessee's case and, therefore, the decision of the Hon'ble Supreme Court in the case ofCITv.Prithipal Singh & Co.(supra) holds good. Hence, we confirm the order of the Learned CIT(A) in deleting the penalty of Rs. 2,62,213/- and the ground of appeal of the Revenue is rejected."

7.However, the amendment to section 271(1)(c) by the introduction of Explanation 4 has been interpreted and explained as evident from the judgment inSaheli Leasing & Industries Ltd'scase (supra) wherein it has been held as under:-

". . . . . .Thus, this was not a substantive amendment which created imposition of penalty for the first time. The amendment by the Finance Act of the relevant year as specifically noted in the Notes on Clauses shows that the proposed amendment was clarificatory in nature and would apply to all assessment even prior to the assessment year 2003- 04. (paragraph 25)

Thus, inGold Coin(supra), after a combined reading of the recommendations of the Wanchoo Committee, and Circular No.204 dated July 24, 1976, it was clarified that points had been made clear with regard to Explanation 4(a) to section 271(1)(c)(iii) to intend to levy penalty not only in a case where after addition of concealed income, a loss returned, after assessment becomes positive income, but also in a case where addition of concealed income reduces the returned loss and finally the assessed income is also a loss or minus figure. Therefore, even during the period between April 1, 1976 and April 1, 2003, the position was that penalty was still leviable in a case where addition of concealed income reduces the returned loss." (paragraph 26)

8.We would have accepted the contention of Mr.Agarwal on the point of law as noted had it not been submitted by Mr.Goswami that the factual aspects wit

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h regard to alleged suppression of sale, raised in the grounds of appeal before the CIT(A), were not urged in view of the judgment inPrithipal Singh & Co.'scase (supra). Therefore, in view of the aforesaid and as it is contended that notices were not served, for the ends of justice, we set aside the order passed by the learned Tribunal and remand the matter to the Assessing Officer who shall make assessment afresh by passing an order on the basis of materials already on record and after giving an opportunity of hearing within two months from the date of presentation of a copy of the certified copy of this order. It is made clear that we have not gone into the merits of the matter. The appeal is disposed of.
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